INTERVIEW: Brazilian ethanol producer aims to be BECCS leader

Quantum Commodity Intelligence – A Brazilian corn-based ethanol producer is pushing ahead with a pilot programme for the country's first bioenergy with carbon capture and storage (BECCS) facilities, betting on becoming a leader in a sector that has great potential in the South American country.

São Paulo-based FS Agrisolutions plans to combine carbon credits and ethanol as buyers seek lower-carbon footprint fuels, representatives from the company told Quantum in an interview, aiming to meet growing demand for lower-carbon ethanol.

"There are many buyers looking into this; they are not just looking for any ethanol," said FS chief executive, Rafael Abud. "Sustainability will be ever more important going into the future."

The FS team believes ethanol's carbon intensity will become increasingly more relevant as countries strengthen greenhouse gas emission reduction mandates, including Brazil whose RenovaBio policy awards credits for GHG reductions in transport fuels.

FS Agrisolutions recently announced that it would invest BRL350 million ($63 million) to build a BECCS facility at its ethanol plant in the city of Lucas do Rio Verde, in Mato Grosso state, with a capture capacity of about 423,000 tonnes of carbon dioxide equivalent (tCO2e).

The company invested BRL110 million in the project's first phase when it worked through the bureaucratic part, such as state environmental licenses, and produced technical studies on the wells destined for carbon storage.

FS aims to start works next April, pending approval, and the project to be fully operational "by mid-2026", according to Daniel Costa, vice president of sustainability at FS.

Decisions

One of the decisions that needs to be made, though, is whether to use US-based registry Verra or Switzerland-based Gold Standard to develop the carbon credit project, he said.

Another step is to find buyers for the yet-to-be-issued credits, in this nascent sector that needs to scale up carbon credit volumes to provide more pricing clarity.

Currently there is a wide gap in the value of contracts on offer.

Quantum heard two offers over the past months ranging between $100/tCO2e and $300/tCO2e for 50,000 tonnes under contracts for deliveries in 2026.

FS did not disclose its anticipated price for credits, although it is talking to potential buyers.

The company decided to push forward with the facility's construction, despite the market's early days, because Brazil approved the "Fuel of the Future" law regulating the development of carbon capture and storage (CCS) projects, including BECCS.

Brazil's Minister of Mines and Energy did a good job developing the new regulation, said Abud.

"They have been listening to the sector," said Abud, who was at the side of President Luiz Inácio Lula da Silva at the ceremony to sign the regulation into law on October 8.

Under the new law, the National Oil Agency (ANP) will oversee CCS markets in the country.

FS's facility is expected to be 'fast-tracked' by ANP given it is an experimental project and the agency itself hopes to gather data from the plant in the state of Mato Grosso to develop further guidelines, said Abud.

Carbon intensity

For FS, apart from receiving income from the sale of carbon credits, deploying carbon storage is also a strategy to make its ethanol more competitive from a carbon footprint perspective.

The carbon intensity of Brazilian corn-based ethanol is currently about 20 grams of CO2-equivalent per megajoule (gCO₂e/MJ), according to the company's estimates.

However, the company projects that the intensity will drop to -10 gCO2e/MJ once the BECCS facility is up and running.

A potential source of demand for the company's reduced carbon intensity fuel, in addition to blending in gasoline, could be as feedstock for sustainable aviation fuel, as airlines rush to comply with the UN-backed Corsia decarbonisation scheme.

The scheme, managed by the International Civil Aviation Organization, aims to reduce the sector's emissions by 85% by 2034 compared to levels registered in 2019.

In addition to its ethanol plant in Lucas do Rio Verde, the company also has other two plants in Sorriso and Primavera do Leste, in Mato Grosso, with a combined annual production capacity of 2.3 million cubic meters of ethanol.